Purdue Pharma Pleads Guilty to Health Care Fraud and Kickback Schemes

Purdue Pharma Pleads Guilty to Health Care Fraud and Kickback Schemes

Newark, New Jersey – The Justice Department reported that Purdue Pharma LP, an opioid manufacturer, on 24th November 2020 pleaded guilty to schemes to breach the Anti-Kickback Act, breach the Food, Drug, and Cosmetic Act, and defraud the U.S.

Purdue Pharma appeared in Newark Federal Court before United States Judge Madeline Cox Arleo through videoconference and pleaded guilty to an indictment charging it with one count of dual-object scheme to swindle the United States and to breach the Food, Drug, and Cosmetic Act, and two conspiracy counts to breach the federal Anti-Kickback Act.

U.S. Attorney Rachael A. Honig for the District of New Jersey stated that Purdue Pharma confessed that it advertised and sold its harmful opioid products to health care practitioners, although it had reason to believe those practitioners were diverting them to addicts and abusers. U.S. Attorney Honig further added that Purdue Pharma deceived and lied to the Drug Enforcement Administration concerning the measures it had taken to combat such diversion, deceitfully increasing the number of its products it was allowed to sell. Purdue Pharma further reimbursed kickbacks to health care providers to motivate them to prescribe even more of its opioid products.

Jeffrey A. Rosen, Deputy Attorney General, stated that the diversion and abuse of opioids prescriptions have contributed to the countrywide tragedy of deaths and addiction, in addition to those triggered by illegal street opioids. Rosen further added that the 24th November 2020 plea of guilty to three felony indictment sends a strong warning and message to the pharmaceutical industry that unlawful behavior will have severe consequences. Also, the 24th November 2020 convictions show the department’s dedication and commitment to its multi-pronged approach for defeating the opioid epidemic.

U.S. Attorney Christina Nolan for the District of Vermont stated that the 24th November 2020 pleas of guilty to felony indictments show that Purdue Pharma valued opioids profits over the people’s interests destroyed doctor-patient trust. U.S. Attorney Nolan further added that they hope the firm’s plea of guilt sends a warning or message that the Department of Justice will not tolerate or allow big tech and big pharma to participate in illicit profit-generating plots that interfere with sound medicine. U.S. Attorney Nolan concluded her statement by saying that they further hope that this plea of guilty will kindle some sense of justice to individuals who have endured from opioid addiction entailing oxycodone and some vindication for families and the loved one of the individuals who were unable to survive such addiction. 

Calvin Shivers, Assistant Director of the Federal Bureau of Investigation – Criminal Investigative Division, stated that this case clearly shows that no firm, including Purdue Pharma, whose behavior harm and endanger the health and safety of the U.S. public, above the law and beyond the reach of law enforcement agencies. Assistant Director Shivers further added that the opioid crisis continues to spread across the nation affecting countless U.S. citizens and harming and endangering communities. Assistant Director Shivers concluded his statement by saying that the Federal Bureau of Investigation, along with their law enforcement associates, is persistently committed to investigating and prosecuting criminals for their roles in fueling this epidemic.

As part of the 24th November 2020 plea of guilty, Purdue Pharma further confessed to conducting underlying Counts Two and One, which were probed by the Office of United States Attorney for the District of New Jersey and the Justice Department – Consumer Protection Branch. That inquiry established that, between May 2007 and at least March 2017, Purdue Pharma schemed to swindle the United States by impeding the legitimate function of the United States Drug Enforcement Administration. Purdue Pharma represented to the U.S. Drug Enforcement Administration that it kept an effective anti-diversion program when, in fact, Purdue Pharma carried on with marketing its opioids products to over 100 health care practitioners who the firm had good reason to trust were diverting opioids and by reporting deceiving information to the U.S. Drug Enforcement Administration to boost Purdue Pharma’s manufacturing quantities. The deceiving information included prescription data that comprised prescriptions prescribed by medical physicians that Purdue Pharma had good reason to trust were engaged in the diversion. The scheme further entailed aiding and abetting breaches of the Food, Drug, and Cosmetic Act by enabling the distribution of its opioid products, such as OxyContin, without an authentic medical purpose, thus without licit prescriptions.

Purdue Pharma also confessed that it schemed to breach the Anti-Kickback Act. From June 2009 and March 2017, by making reimbursements to two medical physicians through Purdue Pharma’s doctor speaker program to persuade those physicians to prescribe more prescriptions for Purdue Pharma’s opioid products. Besides, between April 2016 and December 2016, Purdue Pharma made reimbursements to Practice Fusion Inc., an electronic records firm, in return for recommending, referring, and arranging for the ordering of Purdue Pharma’s extended-release opioids products, such as Butrans, OxyContin, and Hysingla.

Under the plea agreement conditions, Purdue Pharma assented to the imposition of the largest punishment ever levied against a pharmaceutical maker, like a 3.544 billion U.S. dollars criminal fine and an additional 2 billion U.S. dollars in criminal forfeiture. For the 2 billion U.S. dollars criminal forfeiture, the firm will reimburse 225 million U.S. dollars after the entry of the verdict of the conviction pursuant to the plea agreement. The department is ready and willing to credit the value conferred by the firm to local and state under the anti-pilling on and coordination policy of the department if specific conditions are met.

Purdue Pharma has also assented to a civil settlement agreement that gives the United States an unsubordinated, allowed, general unsecured bankruptcy claim for recovery of 2.8 billion U.S. dollars to settle its liability under the False Claim Statute. The Sackler family will separately reimburse 225 million U.S. dollars in damages to settle its civil False Claims Statute liability.

The civil and criminal resolutions, which were reported on 21st October 2020, do not entail any person’s criminal release, including the Sackler’s family members, nor are any of the firm’s executives or workers getting civil releases. 

On 17th November 2020, the bankruptcy court in New York’s Southern District sanctioned the firm’s financial terms of the global resolution. The resolution comprises the condition that the firm stops running in its current form and instead emerges from bankruptcy as a PBC (Public Benefit Company) or entity with the same mission designed for the benefit of the United States public. The returns of the Public Benefit Company will be channeled to Local and State opioid abatement programs. According to the value that would be conferred to local and state governments via the public benefit company, the department is ready and willing to credit up to 1.775 billion U.S. dollars against the agreed 2 billion U.S. dollars forfeiture amount. The department anticipates working and collaborating with creditor groups in the bankruptcy in drafting the path forward for this public benefit company to best achieve public health goals.

The global resolution does not settle claims that States might file or have against Purdue Pharma or Sackler’s family members, nor does it hinder the ability of the debtors or the third parties to recover any deceitful transfers.

Deputy Attorney General Rosen; First U.S. Assistant Attorney Honig for the District of New Jersey; Acting Assistant Attorney General Clark of the Civil Division; and U.S. Attorney Nolan for the District of Vermont made the announcement on 24th November 2020. The criminal inquiries resulting in Purdue Pharma’s guilty plea were carried out by the Offices of the United States Attorney for the Districts of Vermont and New Jersey, the Consumer Protection Branch of the Department of Justice – Civil Division, and the Federal Bureau of Investigation – Newark and Washington, D.C. Field Offices, with assistance by U.S. Drug Enforcement Administration.

Considered as serious healthcare offenses, violating the Controlled Substance Act, False Claim Act, or the Anti-Kickback Statute will either send you straight to the cooler or have you incur heavy fines. As a grave, it is defrauding health care programs such as Medicaid, Medicare, and Tricare of their federally allocated funds.

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